Sustainable growth wins out for green energy manufacturer

Sustainable growth wins out for green energy manufacturer
Operators finish assembling new solar panels at Itek Energy in its new building on Cornwall Avenue in Bellingham. (Andy Bronson | The Everett Daily Herald)

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Filed on 09. Jul, 2018 in Contents, Features, News

By Emily Hamann

The future of solar energy is sunny.

And a Bellingham company is perfectly poised to reap the benefits.

It’s been a big couple of years for Itek Energy. After years of steady growth, the solar panel manufacturer moved into a bigger, state of the art factory near downtown Bellingham last fall.

It’s eyeing even more growth — possibly planning another factory in the Southwest part of the U.S. in order to grab a piece of the rapidly growing solar panel market.

On Oct. 4. Itek cut the ribbon on its new facility at 800 Cornwall Ave., on the Bellingham waterfront.

“When we had our first meeting about the waterfront, this was the kind of business that we imagined would be down here,” Bellingham Mayor Kelli Linville said, at the ribbon cutting event. “Homegrown, able to expand and good for our environment and our green power.”

The building used to be part of the Georgia-Pacific pulp and paper mill operation on the waterfront. Since the mill closed in 2007, the port and the city have been working to bring back jobs to the area.

In a way, Itek, which employes more than 120 people, brings industrial activity on the waterfront full circle.

“G-P was there, a hundred years of manufacturing, sort of the old-school way,” Karl Unterschuetz, the director of business development at Itek, said.

Now manufacturing is coming back to the waterfront. But now its cleaner, leaner, high-tech.

Unterschuetz called it “Manufacturing 2.0.”

“It’s pretty exciting,” he said.

The new, 48,000-square-foot warehouse is a major expansion over Itek’s old 11,000-square-foot facility on Hammer Drive, in the Irongate neighborhood of Bellingham.

Itek was founded in 2011. From the beginning, the company’s goal was steady, sustainable growth.

“We scaled the company and ramped the company at a scale that met the market we were selling to,” Unterschuetz said.

That market doubled and tripled every year for the first four or five years, he said.

“The market was small but it’s grown very, very quickly.”

Currently, most of Itek’s market is in the state — around 90 percent of the panels it makes stay in Washington.

Most go to King County, but quite a few stay in Whatcom County.

“It’s kind of hard to drive around Bellingham now without seeing a solar array that we’ve built,” Unterschuetz said.

Many of those panels were installed by Western Solar, is based in Bellingham and installs solar systems throughout Western Washington.

It uses Itek panels about 90 percent of the time, Markus Virta, the director of sales and business development at Western Solar said.

“Part of that is we love their product,” Virta said. Another part is that the state gives homeowners boosted incentives if the panels they install are made in Washington. “The finances look better with Itek right now as well,” Virta said.

Western Solar started as a renewable energy contractor in 2002, and started focusing exclusively on solar projects in 2006.

Demand for solar has increased rapidly in recent years.

“The cost has just come down a lot and there’s demand for clean air and clean solar,” Virta said.

As the demand for solar has gone up, Western Solar has expanded also.

It now has 15 employees, and it is hiring more. It’s also doing more than 15 times the business as it was eight years ago.

Western Solar has been working closely with Itek since the manufacturer first started, Virta said.

“We were really pleased with the quality control commitment that they were making,” Virta said. “The minute they started producing panels, we were buying them.”

Itek succeeded in meeting market demands during a time when a lot of other American solar makers failed, Virta said.

As the cost of solar dropped and demand went up, many companies scaled up too quickly, and had a hard time meeting their production goals while maintaining the quality of their product.

Itek’s slow and steady growth strategy has put the company in a better position in the long run, Virta said.

“They’ve been able to grow slowly and responsibly, so they haven’t take on massive amounts of debt,” Virta said.

Reliability is important in the solar industry, because customers are making a long-term investment. Most panels have a 25-year guarantee.

“We want companies to be around to honor that,” Virta said.

The quality of its product also sets Itek apart, Virta said. Itek tests every single panel that comes off the line, instead of just batch-testing, and takes a high-quality photo of each one to check for tiny hairline fractures that can lower a solar cell’s efficiency.

Itek also uses thicker frame and thicker glass, which prevents the panel from bending and contracting over the heat cycle of a day — another potential cause of microfractures that can make the panel less efficient over time.

“Over 25 years, [Itek’s] panel is going to be more productive than a commodity unit that isn’t as rigid,” Virta said.

Additionally, Itek now has yet another edge over much of its competition.

In January, the federal government imposed new tariffs on imported solar products.

In the first year, all solar panels and cells imported into the U.S. will get hit with a 30 percent tariff.

That percentage will decline over a four-year period.

However, the first 2.5 gigawatts of solar cells imported into the country are exempt from the tariffs.

“Imported cells are basically tariff free,” Unterschuetz said. That’s good news for Itek, which imports the solar cells used to make its solar panels. It also means most of the company’s competition has a disadvantage.

“We’re competing against modules that are imported, primarily, now,” Unterschuetz said. He doesn’t think the country will hit that 2.5 gigawatt ceiling in at least the next year.

When the tariffs went into place, there were relatively few producers of solar panels left in the United States, according to the Office of the United States Trade Representative.

Between 2012 and 2016, solar imports grew by 500 percent and prices dropped by 60 percent.

Most U.S. producers of solar either stopped production, moved to other countries or declared bankruptcy, according to a trade representative fact sheet.

By 2017, there was only one company left in the country that made both cells and modules, and just eight module-only manufacturers, according to the fact sheet.

Prices started rising again toward the end of last year, but have since fallen.

“We now see prices back to where they were a year and a half ago when they were really low,” Unterschuetz said.

The low prices have been a major factor behind the demand for solar panels — since upfront investment can be the dissuading factor when it comes to installing a solar system.

The less solar costs, the more customers there are for whom that investment will pencil out over the long run.

“People have been interested in solar for a long time,” Unterschuetz said. “Now you can do it economically.”

In places like California, solar has almost become standard.

There are huge, hundred-house developments beings built with solar already installed.

“It’s becoming as desired by customers as granite countertops,” Unterschuetz said.

Solar is becoming especially in demand in California and the Southwest, where residents pay more for energy and use more air conditioning in the summers.

That’s a market Itek is particularly interested in.

They’ve had sales people in California for a year, and they’ve been scouting places for a possible new factory down south.

“The California market for solar is so big it basically eclipses everything else in the country,” Unterschuetz said. “We could take advantage of a very small portion of it.”

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bGk+PHN0cm9uZz53b29fc2xpZGVyX2hlYWRpbmc8L3N0cm9uZz4gLSBSZWNlbnQgbmV3czwvbGk+PGxpPjxzdHJvbmc+d29vX3RoZW1lbmFtZTwvc3Ryb25nPiAtIFRoZSBKb3VybmFsPC9saT48L3VsPg==